A $6

Billion Saudi Airliner Deal Expected For Boeing, Douglas

August 21, 1993|By Vincent J. Schodolski. Tribune Staff Writer.

LOS ANGELES — Saudi Arabia's national airline Saudia has reportedly agreed to buy 59 passenger jets worth $6 billion from Boeing Co. and McDonnell Douglas Corp., a deal that would provide two of the nation's largest aircraft producers with welcome relief from sagging sales and declining work forces.

Seattle-based Boeing and St. Louis-based McDonnell Douglas have seen sales of both commercial and military aircraft collapse in the last three years. Under the weight of the airline industry's financial crisis and shrinking military budgets, both have been forced to lay off tens of thousands of workers, contributing to the lingering recession on the West Coast, where both build their jetliners.

The purchase, which was confirmed by Sen. Patty Murray (D-Wash.), was reported to involve six jumbo or wide-body planes as well as 24 medium-range and 29 short-range jets.

Murray said that the sale, which has been under discussion between the two aircraft giants and the Saudis for more than a year, was concluded only after President Clinton personally intervened with Saudi Arabia's King Fahd.

Boeing and McDonnell Douglas, which were in competition with the European airline consortium Airbus Industrie, refused to confirm the deal pending an announcement from Saudi Arabia.

The president was reported to have telephoned the Saudi king, asking him to consider buying American aircraft, and was told by the monarch that Saudi Arabia wanted to do business with the United States and that he was "grateful" for the assistance the U.S. provided his country in the gulf war.

French President Francois Mitterand had intervened on behalf of Airbus for the Saudi business.

The deal, which was reported to include the initial 59 jets and an option for 20 more planes, followed preliminary approval last week of a $6.2 billion loan guarantee by the U.S. Export-Import Bank. The guarantee was to cover the sale of as many as 80 Boeing jets to the Saudis.

It was not clear how many of the planes would be sold by Boeing and how many by McDonnell Douglas, although Boeing was expected to get most of the orders.

Boeing controls the bulk of the world's commercial aircraft market, building about 60 percent of passenger jetliners. Airbus has about 35 percent, followed by McDonnell Douglas, a distant third with less than 5 percent.

If the Saudis buy Boeing 747s, the sale would help another of Southern California's ailing aerospace companies, Northrop Corp., which builds the fuselage for the jumbo jets.

Boeing spokesman Paul Binder said it was too early to say what impact any sale would have on employment.

Boeing's employment has fallen from a 1989 peak of 165,000 people, most of them at plants in Seattle and Wichita, to the present level of 132,000. Binder said Boeing planned to reduce its work force an additional 28,000 by the first half of 1994.

McDonnell Douglas' commercial airliner division, Douglas Aircraft, saw its employment peak at 50,000 in 1990. That figure has fallen to 13,000, but a portion of that decline was caused by the transfer of military aircraft production personnel to another division.